Wellington City Quarterly economic monitor - March 2020

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Overview

Indicator Wellington City Wellington Region New Zealand
Annual average % change
Gross domestic product
1.9%
2.1%
1.7%
Traffic flow
-2.2%
-1.5%
-0.2%
Health Enrolments
2.2%
2.0%
2.5%
Consumer spending
1.8%
3.5%
3.0%
Residential consents
36.1%
21.7%
9.0%
Non-residential consents
74.2%
68.1%
-0.4%
House prices*
6.2%
8.2%
5.9%
House sales
2.6%
-2.0%
2.0%
Tourism expenditure
1.1%
1.9%
1.4%
Car registrations
-3.8%
-6.4%
-11.5%
Commercial vehicle registrations
-13.3%
-13.8%
-12.8%
Jobseeker Support recipients
6.8%
5.6%
11.7%
Level
Unemployment rate
3.6%
3.7%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Wellington City

Wellington City is showing the hallmarks of a slowing economy with Infometrics’ provisional GDP growth estimate for the city slowing to 1.9% in the March 2020 quarter, traffic flows falling 2.2%, growth in electronic card spending on retail purchases down to just 1.8%, car registrations falling 3.8%, commercial vehicle registrations down 13%, house price inflation subdued at 6.2% and Jobseeker Support recipients up 6.8%.

However, the number of house sales remains robust at over 3,100 for the year to March 2020 and the unemployment rate remains low at 3.6% compared with 4.1% nationally.

The city’s low unemployment rate will stand it in good stead as the effects of COVID-19 and the measures to contain it send New Zealand into recession. Infometrics is forecasting Wellington City’s GDP to decline slightly less than the 8.0% fall in the national economy. The city’s large public sector will cushion it from the worst impact of the pandemic.

Wellington City has a degree of exposure to international tourism and international education, both of which will see steep declines until New Zealand’s borders reopen. In addition, the lockdown will result in large falls in car and commercial registrations, consumer spending, and house sales in the June 2020 quarter, which will have knock-on effects through the local economy for several quarters to come. Building consents are a source of optimism. Residential consents grew 36% in the March 2020 year, and non-residential consents grew 74% both on the back of two very strong December 2019 and March 2020 quarters. Assuming these consents translate into building work, this should help support the local construction industry through the downturn.

Overview of national economy

The COVID-19 pandemic has upended the economy and plunged New Zealand into the sharpest recession in living memory. The March quarter includes the full progression of the virus, from its origins in China and subsequent hit to New Zealand exports, through to border closures forcing lower tourism arrivals, before culminating in the lockdown of New Zealand under Alert Level 4. Our March 2020 Quarterly Economic Monitor only captures the initial economic effects of putting the New Zealand economy on life support. The June Monitor will better reflect activity changes. No sector of the economy will be spared, with the regional impacts dependant on the local economic structure – Infometrics is now forecasting the loss of 250,000 jobs nationally over the next year, followed by a long period of restructuring the economy.